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The spark plug threads in the cylinder head are stripped out, so as a result they are unable to thread the extractor tool into the head to extract the broken portion of the plug? is that correct?
If that's the case, they need to install a spark plug insert. I understand it's a tight space, so they will probably have to use a small right angle pneumatic drill to drill it out and take their time, but I don't understand why they would need to remove the engine for this. . If you'd like I can send you a link to a kit specifically for this. Once the spark plug insert is installed they will be able to thread their tool into the opening and extract the broken part of the plug. And, no, this is absolutely NOT the first time this has happened.
I'm sure if you were to try a ford technician, he has a much better chance of having encountered this issue before. They make a kit specifically to repair the spark plug threads in these engines so the engine doesn't have to be removed and disassembled. I don't know what they have to lose since they are suggesting removing the engine and replacing the cylinder head anyway. Here is the kit. Another option is a time sert which is cheaper but this is a far better option. I would save pulling the engine as a last resort.
SPARK PLUG INSERT KIT
actually, i shouldn't say that this is far better than a time sert. I have used time serts and had no issues on spark plug threads.
Does that help at all? please let me know so I can make sure that you have gotten the answers you need. Thank you.